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Department stores need to be driven by digital and experience – and here’s how to do it

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Stores need to change: John Lewis is a great example to learn from research suggests
Stores need to change: John Lewis is a great example to learn from research suggests

Department stores face a special challenge in the changing retail environment – with brands able to sell directly, they need to focus on experience and customer experience to stay relevant. And analysts at Forrester believe they know how to make it happen.

 

The secret lies in Application Development and Delivery (AD&D), says senior analyst George Lawrie – and he has a five-step plan to help department stores shift from being the favourite 20thCentury retail model, to being able to compete in a very different 21stCentury.

 

Step one involves shifting from sales to service, with AD&D teams building application-enabled, personalised service to solve the whole of the customer’s problem — not just procuring a product. Services will include skilled in-person service to match customer needs to the right line in the department store, alteration, gift wrapping, and dispatch.

 

They might even embrace credit account sales or white-glove delivery offerings (see below). Then there’s the lament of the modern-day shopper — finding a store associate: Neiman Marcus provides customers a mobile app to text, email, call, or FaceTime any sales associate.

FIGURE 1 Department Stores Shift From Sales To Service
FIGURE 1 Department Stores Shift From Sales To Service
FIGURE 2 Department Stores Develop Into Destinations
FIGURE 2 Department Stores Develop Into Destinations

Step two takes this further and looks to shift department stores from retail environments to compelling destinations. Here Lawrie draws on, how to drive footfall, Debenham’s developed partnerships with foodoutlets Nando’s and Crussh and with collection service Doddle. John Lewis opened its first click-and-commute store in 2014 to cater to 48 million annual commuters passing through London’s St. Pancras station (see above). Macy’s boldly added more entertainment and hospitality to its Backstage off-price concept, driving traffic and retaining price-sensitive customers.

To emulate these successes, AD&D professionals must implement store apps from providers like Diebold Nixdorf, Oracle, or PCMS that support multimode retail and hospitality.

 

Step three sees department stores remodel as really inviting distribution centres. Cost and convenience rule: 62% of US online adults use in-store pickup simply to avoid shipping costs, but 46% use it because they can do so at a store of their choice.

 

Capitalising on their prime locations, department stores can compete for prime sub-30 minute online order fulfillment or lease surplus space to fulfill third-party orders. Little wonder Kohl’s is leveraging [its] entire store network to get Kohl’s.com orders to [its] customers fast and efficiently, says the report.

FIGURE 3 The Department Store As Distribution Centre
FIGURE 3 The Department Store As Distribution Centre
FIGURE 4 Department Store As Physical-Digital Hybrid
FIGURE 4 Department Store As Physical-Digital Hybrid

Step four suggests how to morph stores into quasi-digital offerings and to recognise shoppers in-store like they do online. Department store AD&D leaders must invest in an engagement platform to aggregate services and rich media to deliver compelling mobile moments. For example, Saks Fifth Avenue’s digital experience involves unique tools that enable our in-store associates to better serve customers(see above).

 

Finally, step five focusses in on the infrastructure needs — think bulletproof, secure Wi-Fi that keeps customers and associates connected to their apps and data. Infrastructure must also include on-demand network storage and processing capacity to cope with both the frenzy of Black Friday and a low appetite for the burden of fixed infrastructure cost.

 

And department stores need to expose enterprise data and services directly to both customers and employees, so they vitally need reliable data quality and robust identity and authorisation capabilities. Ultimately, these stores must provide value in exchange for customer data (see below).

FIGURE 5 Department Stores In The Age Of The Customer
FIGURE 5 Department Stores In The Age Of The Customer
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